Diamond Steel Vs State of Up And 3 Others (Allahabad High Court)
Best judgement assessment cannot be resorted to by authorities when adjudication is made under Section 74
In the case of Diamond Steel vs. State of UP and 3 Others, heard by the Allahabad High Court, the petitioner, a partnership firm registered under the GST Act, challenged orders passed against it under Section 74 of the Uttar Pradesh Goods and Services Tax (UPGST) Act for different financial years. The petitioner contested the assessment orders dated June 3, 2021, and subsequent appeal orders dated July 13, 2021, which imposed substantial tax and penalty liabilities.
The petitioner’s primary contention was that the assessments under Section 74 were improper and not in accordance with the law. The proceedings stemmed from a search and seizure operation conducted by the Special Investigation Branch (SIB) on October 31, 2019, at the petitioner’s business premises. During this operation, certain stock and documents were seized, forming the basis for subsequent notices and proceedings under Section 74.
The petitioner argued that despite participating in the process by submitting replies and attending hearings, the authorities failed to provide crucial documents, including the SIB report, which was referenced in the notices but never furnished. This omission was central to the petitioner’s defense, as it claimed that the assessment under Section 74, which deals with tax evasion due to fraud or willful misstatement, must be based on full disclosure of adverse materials, including any reports relied upon.
